Tax Wage and Bank Levy

When taxpayers owe tax debts to the IRS, one form on collection that the IRS frequently imposes is a wage levy or a bank levy.  Essentially, the IRS steps in between the taxpayer and their paycheck, and deducts a portion of the check before the taxpayer is able to access the funds.  This IRS need not obtain taxpayer consent prior to issuing the levy, and once started, the process can be difficult to stop.  In all situations involving the IRS, being uncooperative or dismissive of notices from the IRS is the worst possible move.  The IRS may be willing to work with taxpayers, but only if they are attentive and reasonably cooperative with the IRS agent. 

Releasing a Wage or Bank Levy

The IRS may consider releasing a wage or bank levy if the taxpayer submits an Offer in Compromise, provided that the IRS believes that the taxpayer will make their best efforts to uphold the terms of the agreement.  If the argument is convincing and the terms are reasonable, the IRS may agree to release the wage or bank levy even though full payment has not yet been made.

Additionally, if a compelling case is made that the lien will cause undue hardship to the taxpayer; the IRS may consider releasing the levy in exchange for a workable compromise.  For instance, if the taxpayer is trying to claim a hardship, and the IRS has put a levy on their car, the argument can be made that they levy creates a further burden that will make it even more difficult for the taxpayer to satisfy the debt.  Also, the argument that the asset which has been levied is relatively low in value is often a persuasive argument to encourage a release.  If new terms are proposed, the taxpayer must demonstrate that they will be able to comply with the new terms, and if the argument is persuasive, the IRS may consent to the release provided that the taxpayer makes an additional promise to pay.

Releasing a Levy

To have a wage or bank levy released, the taxpayer must submit a request to the IRS to formally initiate the release process.  Letters requesting release of a wage or bank levy should be mailed to:

IRS Centralized Processing Center
P.O. Box 145595, Stop 8420G
Cincinnati, OH 45250

The letter must include information about the nature of the wage or bank levy and the reason that the release is being requested.

Examples of compelling arguments for release of a tax lien include things like: the taxpayer has made payment in full (include bank records and/or the notice that the IRS sent verifying that the debt was paid in full); the tax lien itself was issued in error (and make sure to provide plenty of documentation to substantiate your claim), the debt was discharged by the bankruptcy court (include notice of discharge with your appeal), or that the statute of limitations has run out (and include the date the taxes were originally due to prove that the 10-ytear period has lapsed). 

Getting Legal Help

Getting legal help from an attorney is often critical to the process of having levies released.  The lawyer will be able to help craft your argument, gather the necessary documentation, and relay the information in a persuasive way to the IRS.  Seeking out the help of an experienced tax attorney who specializes in issues related to levies and liens can mean the difference between getting a successful release and being denied your request.